In December 2013, Justice Campbell of the Federal Court of Canada awarded 10 million dollars in statutory damages to Twentieth Century Fox Film Corporation against Nicholas Hernandez and two unknown defendants. The court also awarded an additional half a million dollars in punitive damages. The decision was reached by default judgment, which means that the defendants did not respond to the lawsuit.

Statutory damages for copyright infringement have been available under Canada’s Copyright Act since 1997. Essentially, a plaintiff in a copyright infringement suit has the option to choose to receive statutory damages rather than to establish the actual quantum of damages suffered. For infringement with a commercial purpose, statutory damages range from a minimum of $500 to a maximum of $20,000 for all of the infringements related to a given work. A plaintiff might choose statutory damages when the amount of their loss is either very small or is difficult to quantify. Statutory damages are of particular benefit to large corporate rights holders whose works are downloaded in large quantities from the internet, and who might otherwise face difficult challenges in proving actual losses. Among other things, statutory damages provisions in the U.S. have made it worthwhile for record companies to sue individuals for music downloading. Where a defendant has downloaded 1000 songs, for example, the per-work damage awards would quickly add up to a significant total, making the lawsuit not simply about the recovery of damages (which may greatly exceed the benefit obtained by the defendant) but also about punishment and arguably deterrence. In Canada, the 2012 amendments to the Copyright Act have made these kinds of lawsuits more difficult in cases where the defendants have copied works for purely private purposes. In such cases, the amount of statutory damages is considerably reduced and such damages are awarded not per work, but rather for all infringements and for all works in any given proceeding.

In Twentieth Century Fox v. Hernandez,* the defendants were alleged to have operated two websites that made unauthorized copies of episodes of both The Simpsons and Family Guy available for free download or streaming. These activities were not of a purely private nature – the copies were made with a view to disseminating them further, and there was evidence that the defendants profited from their venture. The Court did not provide a detailed accounting of how it arrived at the statutory damages award of $10,000,000. For example, it did not identify how many episodes of the two television series were made available for download. As a result, it was not clear whether Justice Campbell was awarding damages at the low or high end of the scale – or somewhere in between. Since no amount per work is actually specified (nor is the number of works provided) it is no surprise that there is also no explanation of the rationale for the per-work amount. These details would seem to be important in shaping the jurisprudence in relation to these types of awards. Further, according to Justice Campbell, the award of statutory damages alone was not sufficient “to achieve the goal of punishment and deterrence of the offense of copyright infringement in this case”. For this reason, the additional half million dollars in punitive damages was awarded. Without any indication of the number of works at issue or the per work amount of damages, it is also difficult to assess the appropriateness of the award of punitive damages. Given that the defendants did not defend themselves in the proceedings, it is not likely they will file an appeal; however, the low likelihood of an appeal is not an excuse for not providing full reasons to explain the award of damages. [Note that there are approximately collectively about 750 episodes of the two shows. If all episodes were made available from the websites, then the damage award would be just over $13,000 per episode – on the high end, but not at the top of the scale.]

Mistrale Goudreau and Joao Velloso have written an interesting article on statutory damages in the recently published book Intellectual Property Law for the 21st Century: Interdisciplinary Approaches. In their piece, titled “Punishment Private Style: Statutory Damages in Canadian Copyright Law”, Goudreau and Velloso argue that punitive and statutory damages are used by courts to penalize copyright infringement – as is evident in the Hernandez case. The authors argue that the result is a form of punishment for infringing activity that lacks the procedural safeguards that are normally present in criminal prosecutions. While the authors’ focus is more on the use of statutory damages in non-commercial contexts, they offer some thoughtful – and critical – insights into the role of statutory damages within our copyright regime.

* Note that the court decision discussed in this blog is not available from the Federal Court’s website. This link is to a private website that has made the decision publicly available.